MicroRNAs (miRNAs) are a class of small RNA molecules that regulate the stability or the translational efficiency of target messenger RNAs (mRNAs). The latency-associated transcript (LAT) of herpes simplex virus-1 (HSV-1) is the only viral gene expressed during latent infection in neurons. LAT inhibits apoptosis and maintains latency by promoting the survival of infected neurons. No protein product has been attributed to the LAT gene and the mechanism by which LAT protects cells from apoptosis is not yet known. Here we show that a miRNA encoded by the HSV-1 LAT gene confers resistance to apoptosis. Neuroblastoma cells transfected with a fragment of the LAT gene show reduced susceptibility to cell death. The anti-apoptotic function of LAT has been mapped to a region within the first exon. We have identified and characterized a microRNA (miR-LAT) generated from the exon 1 region of the HSV-1 LAT gene. The LAT miRNA was found to accumulate in cells transiently transfected with the LAT gene fragment or infected with a wild-type strain of HSV-1. A mutant virus in which a 372-nucleotide fragment encompassing the mature miRNA was deleted neither protected the infected cells from apoptosis nor generated an miRNA. miR-LAT exerts its anti-apoptotic effect by downregulation of transforming growth factor (TGF)-beta 1 and SMAD3 expression, both of which are functionally linked in the TGF-beta pathway. Our results suggest that the miRNA encoded by the HSV-1 LAT gene regulates the induction of apoptosis in infected cells by modulation of TGF-beta signalling and thus contributes to the persistence of HSV in a latent form in sensory neurons.